Leading the decline was spending on clothing, footwear and personal accessories, which fell by 1.2 per cent over the month. Spending on household goods and cafe, restaurant and takeaway food fell by 0.9 and 0.7 per cent respectively.

Department store spending, other retailing and food retailing all went up over the month.

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Westpac analyst Matthew Hassan said the "wealth effect spillovers" from a housing market correction led by the price falls in Sydney and Melbourne were weighing on sales.

"Overall the April retail update is clearly on the soft side, making a weak start to the June quarter and with some worrying signs that wealth effect drags may be intensifying," he said.

In a note to clients, UBS analysts estimated that in the six months to December 2018, listed buy-now, pay-later providers Afterpay and Zip accounted for about 16 per cent of the growth in discretionary retail spending. This is up from an estimated 14 per cent in the six months to July 2018.

"Growth largely reflects a shift to online, with retailers telling us [buy-now, pay-later] offers can make up [more than 50 per cent] of online sales," UBS said in a note.

Online retail sales make up 5.7 per cent of total retail sales, according to ABS data.

The analysts said retail sales were holding up better than feared.

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"As a consequence we are becoming less concerned, with an opportunity now to potentially try to negotiate better terms on the buy-now, pay-later options," UBS said.

It is estimated 22,000 Australian retailers use Afterpay, while Zip has grown to 14,000.